The New Tyranny: How development experts have empowered dictators and helped to trap millions and millions of people in poverty
On the morning of Sunday, Feb. 28, 2010, the villagers of Mubende District, Uganda were in church when they heard the sound of gunfire. They came out to find men torching their homes and crops. The soldiers held them off at gunpoint from rescuing their homes; one 8-year-old child was trapped and died in the fire. The soldiers then marched off the 20,000 farmers from the land that had been in their families for generations. The reason for the violence was that a forestry project financed by the World Bank wanted the land.
The only thing that distinguishes this episode from the many human rights violations that happen in the name of development is that it got unusual publicity. The New York Times ran a front-page story on it on Sept. 21, 2011. The World Bank the next day promised an investigation. What is most revealing of all about this episode is what happened next: nothing. The World Bank never investigated its own actions in financing this project. Now, just after the fourth anniversary of the Mubende tragedy, it has been forgotten by nearly everyone except its victims.
The sad neglect of the rights of the poor in Mubende follows from the ideas behind the global war on poverty. Those who work in development prefer to focus on technical solutions to the poor’s problems, such as forestry projects, clean water supplies, or nutritional supplements. Development experts advise leaders they perceive to be benevolent autocrats to implement these technical solutions. The international professionals perpetrate an illusion that poverty is purely a technical problem, distracting attention away from the real cause: the unchecked power of the state against poor people without rights. The dictators whom experts are advising are not the solution — they are the problem.
Jim O’Neill is at it again. He is best known for inventing the acronym BRIC (now BRICS), a group of countries — Brazil, Russia, India, China and then South Africa — which, he claimed, would dominate the world economy in the 21st century. Now he is suggesting that the MINTs (Mexico, Indonesia, Nigeria and Turkey) will have the same economic growth as China if they continue their market-orientated economic policies.
O’Neill, a British economist who used to work for the “vampire squid” investment bank Goldman Sachs, is pursuing a double objective. He is identifying emerging economies fit for investment by the global banking community; he says the BRICS and MINTs are knocking on a development door, which, if they’re pursuing the correct economic policies, will open wide to the benefits of economic growth. His view of the world system regards the self-interested actions of investment bankers as contributing to the development of poor countries; he and other neoliberal economists disguise the central dynamics of economic development under capitalism.
The contemporary world has unprecedented wealth, and mass poverty. Total global wealth was $241 trillion in 2013 and is expected to rise to $334 trillion by 2018. Yet the majority of people live in poverty. To suggest that rising global wealth and global poverty are interrelated, and that the former is premised upon the latter, is not something that most players in international development want to do because it would reveal the sordid foundation of their vision of development.
Human Rights group calls on World Bank to acknowledge role in the mass killing of one million Indonesians
The Oscar-nominated documentary THE ACT OF KILLING was projected on the World Bank headquarters in Washington, D.C. Thursday in an action by the East Timor and Indonesian Action Network. The group is calling on the World Bank to acknowledge its role in the 1965 military coup in Indonesia that lead to the massacre of an estimated one million civilians. The World Bank helped prop up the corrupt government of Suharto, the general who lead the coup and ordered the mass killings. The Bank sent the Suharto regime $30 billion in development aid over the course of three decades despite knowing $10 billion had been looted by the government.
“THE ACT OF KILLING powerfully highlights the ongoing impunity within Indonesia for the 1965 mass murders,” said John M. Miller of the East Timor and Indonesian Action Network. “Tonight we highlight the World Bank’s support for the Suharto regime, which knowingly backed his corrupt government while his post-coup body count climbed. We urge the World Bank to acknowledge its role in Suharto’s many crimes and to apologize and provide reparations to the survivors. Institutions like the World Bank must also be held accountable for their financial assistance to the murderers and decades of support as they continued to violate human rights.”
“The World Bank gave $30 billion dollars to a dictator who killed an estimated one million of his own citizens,” said THE ACT OF KILLING filmmaker Joshua Oppenheimer. “The murderers spent years profiting off of their heinous crimes with the World Bank and other global financial institutions footing the bill.”
THE ACT OF KILLING, currently Oscar-nominated for Best Documentary feature, has been recognized as one of the best films of 2014. The film has received over 60 awards including Best Documentary from the British Academy of Film and Television Arts (BAFTA). While the mass killings of 1965 are an open secret in Indonesia, the government has never acknowledged or apologized for sponsoring the murders. THE ACT OF KILLING, which has been shown in thousands of private screenings and is available free online throughout Indonesia, is empowering victims’ families to demand reparations from the government for the first time.
The World Bank’s Office of the Compliance Adviser/Ombudsman (CAO) determined on January 10 that the Bank’s private-sector lending arm, the International Finance Corporation (IFC), violated “its own ethical standards” when it “lent millions of dollars to a Honduran palm oil company [Dinant Corporation] accused of links to assassinations and forced evictions,” Nina Lakhani reported in the Guardian. Were this true—had the Bank really acted against its principles, displayed over decades of consistent action—then the appropriate response would be global celebration. But the IFC-Dinant incident is just the latest chapter in a miserable story.
Consider, for example, Honduras in the ’90s, when a “paradigm promoted by the World Bank” spurred “a massive re-concentration of land in the Aguán”—the valley where Dinant operates—“into the hands of a few influential elites,” Tanya Kerssen writes in Grabbing Power, her superb study. These land barons, particularly Dinant’s owner Miguel Facussé, thrived as “the Aguán cooperative sector was decimated,” some three-quarters of its land seized. Campesinos, suddenly dispossessed, first sought legal recourse, which failed. They subsequently “protested and occupied disputed land,” Rights Action’s Annie Bird writes in a crucial report, prompting government authorities to review the legitimacy of Bank-assisted territorial transfer. But the June 2009 coup ended this appraisal. Four School of the Americas (SOA) graduates directed Manuel Zelaya’s removal from power—“a crime,” a top Honduran military lawyer, himself an SOA alumnus, admitted, and proof “that the Obama administration had as weak a commitment to democracy, human rights, and the rule of law as the preceding U.S. presidency,” British scholar Julia Buxton explained. Since then, Bird observes, Honduras’ 15th Battalion, Washington-aided “since at least 2008,” has “consistently been identified as initiating acts of violence against campesino movements,” with police forces and Dinant’s security guards getting in on the kills. The CAO paper puts the number of peasant murders since January 2010 at over 100.
In the past we have discussed at length the inevitable demise of the USD as the world’s reserve currency noting that nothing lasts forever. However, when former World Bank chief economist Justin Yifu Lin warns that “the dominance of the greenback is the root cause of global financial and economic crises,” we suspect the world will begin to listen (especially the Chinese. Lin, now – notably – an adviser to the Chinese government, concludes that internationalizing the Chinese currency is not the answer (preferring a basket approach) but ominously concludes, “the solution to this is to replace the national currency with a global currency,” as it will create more stable global financial system.
The infamous chart that shows nothing lasts forever…
President Barack Obama has ordered the National Security Agency to stop eavesdropping on the headquarters of the International Monetary Fund and World Bank as part of a review of intelligence gathering activities, according to a U.S. official familiar with the matter.
The order is the latest move by the White House to demonstrate that it is willing to curb at least some surveillance in the wake of leaks by former NSA contractor Edward Snowden of programs that collect huge quantities of data on U.S. allies and adversaries, and American citizens.
The NSA’s surveillance of the Washington-based IMF and World Bank has not previously been disclosed. Details of such spy programs are usually highly classified.
A total of 252 individuals and entities were blacklisted from January to July 2013, while only 65 such instances were recorded in 2012.
The World Bank is keen to clamp down on misbehaviour with $200bn (£125.5bn, €150bn) given to finance development projects in the world’s poorest states over since 2008. Some estimates put stolen aid at $40bn.
[...] The reported sanctions reveal a number of patterns with five sectors that make up two-thirds of the bank’s reported sanction decisions.
These sectors were healthcare, transportation, agriculture, energy and water.
Regions also represented certain noteworthy trends on the spread of corruption across the globe.
Africa was found to amount to one-third of investigations and the vast majority of cases to date involved fraud.
Furthermore, 29% of debarred firms were located in North America, while 21% were in Europe and central Asia.
In terms of other offences that do not cover bid rigging, fraud and bribery but other wrongdoing known as “sanctionable practices”, 91 entities received other sanctions in the seven months of 2013 compared to 5 in 2012 and 1 in 2011.
As we repeatedly focus on wealth inequality in the United States (i.e.; just four hundred persons in the US have as much in assets and income as the bottom 50% of Americans), a video points out the even more extreme global wealth disparity.
There are many reasons for this. Take for example institutional sources that contribute to this trend. The World Bank, for interest, oversees “loans” to developing nations. But by creating long-term indebtedness, these struggling counties end up owing at least $600 billion dollars in interest on loans whose principals have, in essence, already been paid off in actual dollars.
These usorious interest rates end up in the hands of the bankers and the shareholders of the financial institutions that are inter-related with the World Bank through the nations that govern it, particularly the United States which calls the shots. Criticisms of the World Bank focus on how it creates financial conditions that result in debt dependency of the nations that borrow from it, therfore negatively impacting the economic prospects of the vast majority of its residents.
Trade agreements and global corporate exploitation of international monetary regulations provide resources and cheap labor to developed nations, while leaving poorer countries depleted. Is it possible that rich countries have increased the wealth gap from being 35 times greater during European colonialization to 80 times greater today? The video Global Wealth Equality contends that is the case.
An internal review has thrown into question the validity of the World Bank publishing a competitive economic ranking of countries according to how business-friendly they are.
An independent panel set up by the World Bank’s new president, Jim Yong Kim, to look at one of its highest profile country report said yesterday the bank should stop producing it because it may be misleading.
The bank’s annual “Doing Business” study judges 185 countries on 10 criteria and compiles an index on the ease of doing business, assigning each country a rank. The rankings can carry huge weight with governments.
by Prof Michel Chossudovsky
More than a million people across Brazil have joined one of the largest protest movements in the country’s history. Ironically, the social uprising is directed against the economic policies of a self-proclaimed “socialist” alternative to neoliberalism led by the Worker’s Party government of president Dilma Rousseff.
The IMF’s “strong economic medicine” including austerity measures, the privatization of social programs have been implemented under the “progressive” and “populist” banner of the Partido dos Trabalhadores (PT), in consultation with Brazil’s powerful economic elites and in close liaison with the World Bank, the IMF and Wall Street.
While the PT government presents itself as “an alternative” to neoliberalism, committed to poverty alleviation and the redistribution of wealth, its monetary and fiscal policy is in the hands of its Wall Street creditors.
Ironically, the PT government of Dilma Rousseff and her predecessor Luis Ignacio da Silva has been commended by the IMF for:
“a remarkable social transformation in Brazil underpinned by macroeconomic stability and rising living standards”.
The underlying social realities are otherwise. The World Bank’s “statistics” on poverty are grossly manipulated. Only 11 percent of the population, according to the World Bank are beneath the poverty line. 2.2 percent of the population are living in extreme poverty.
The standard of living in Brazil has collapsed since the accession of the Workers Party in 2003. Millions of people have been marginalized and impoverished including a significant part of the urban middle class.
While the Partido dos Trabalhadores (PT) presents a “progressive” people’s oriented image, officially opposed to “corporate globalization”, the macro-economic agenda has been reinforced. The PT government has consistently manipulated its grassroots, with a view to imposing what the “Washington Consensus” describes as “a strong policy framework”.
The multibillion dollar profit driven infrastructural investments pertaining to The World Cup in 2014 and the Olympic Games in 2016, wrought by corporate corruption, have contributed to a significant increase in Brazil’s external debt, which in turn has reinforced the control of economic policy by its Wall Street creditors.
The protest movement is in large part made up of people who voted for the Partido dos Trabalhadores (PT).
The PT government’s grassroots support has been broken. The base of the Workers Party has gone against the government.
Five nations, which together have nearly half the world’s population, agreed Wednesday to set up a development bank that could easily rival the World Bank. If they succeed, it will mark a serious attempt by this group to redefine the values that humanity shares.
The “club” of the so-called BRICS nations – Brazil, Russia, India, China, South Africa – was started only four years ago. The new bank, which aims to loan or grant $4.5 trillion to poor countries, would be their first concrete step to challenge many of the international norms put in place after World War II, largely by the United States.
They’ve long resented the residual influence of Western countries at many other international organizations, such as the World Bank and the International Monetary Fund. Such multilateral bodies have helped create a “liberal order” for the world, promoting free markets and democratic governance in the way they provide economic assistance or agree on rules for commerce.
Most of all, that order has spread the very notion of a global system based on values and not just national interests. They also stand for the idea that values can be universal.
Setting up a separate “world bank” may represent a symbolic blow to many of those ideas and practices. India’s trade minister, Anand Sharma, said the BRICS will “have a defining influence on the global order of this century.” Together, the group accounts for about a quarter of the world economy.
In a new book, “The End of Power,” author Moisés Naím of the Carnegie Endowment for International Peace writes about how power within the geopolitical landscape is shifting from West to East and from North to South. The BRICS certainly represent that.
In the last 30 years, the world has also seen more democratic revolutions and more international interventions in sovereign countries to uphold human rights. Those trends worry Russia and China, the two BRICS members with the most money to dispense and whose leaders rule with an iron fist. Yet at the same time, the trend in attitudes worldwide reveals less tolerance for strong authority and more desire for freedom. A number of global opinion surveys back that up.
A similar attempt to challenge so-called Western values was made in the 1980s by a few nations in East Asia, such as Malaysia and Singapore. They claimed the region had a cultural bias toward communal rights and loyalty to authority. That campaign fizzled, especially when it was shown that some non-Asian countries also leaned that way.
Despite these concerns about the new bank, it should not be feared, but rather accommodated. It is, after all, helping humanity, or at least a portion of it where the BRICS want to have influence with what strings are attached to loans. The bank’s very existence plays to the idea of a free market of ideas, or a competition based on merit. And it will likely be run in a democratic way.
All that shows how much the current liberal order has become universal.
It would be too easy to divide the world into “the West and the rest.” The norms of the past half century aren’t rooted in the geography or ethnicity of Europe or the US. They have been shown to expand peace and prosperity. New global visions are welcomed if they can be just as effective.
The biggest emerging markets are uniting to tackle under-development and currency volatility with plans to set up institutions that encroach on the roles of the World Bank and International Monetary Fund.
The leaders of the so-called BRICS nations — Brazil, Russia, India, China and South Africa – are set to approve the establishment of a new development bank during an annual summit that began today in the eastern South African city of Durban, officials from all five nations say. They will also discuss pooling foreign-currency reserves to ward off balance of payments or currency crises.
“The deepest rationale for the BRICS is almost certainly the creation of new Bretton Woods-type institutions that are inclined toward the developing world,” Martyn Davies, chief executive officer of Johannesburg-based Frontier Advisory, which provides research on emerging markets, said in a phone interview. “There’s a shift in power from the traditional to the emerging world. There is a lot of geo-political concern about this shift in the western world.”
The BRICS nations, which have combined foreign-currency reserves of $4.4 trillion and account for 43 percent of the world’s population, are seeking greater sway in global finance to match their rising economic power. They have called for an overhaul of management of the World Bank and IMF, which were created in Bretton Woods, New Hampshire, in 1944, and oppose the practice of their respective presidents being drawn from the U.S. and Europe.
An American hedge fund has seized a ship owned by the Argentine navy from a Ghanaian port, as part of an attempt to collect on bonds purchased after Buenos Aires defaulted in 2001.
The fund, Elliott Capital Management, has been engaged in a long-running legal battle with the Argentine government. It specialises in what is euphemistically termed “distressed debt” – it buys up bonds held by countries which are extremely likely to default, or which have already defaulted. As a result, it gets them for a pittance, around one fifth of face value.
The strategy from there is to refuse to accept the default. If it does not voluntarily enter into any debt-swaps, then the company can continue to claim it is rightfully owed the full amount on the bonds. If, eventually, it gets paid, a massive profit has been earned.
This tactic has led to Elliot, and other funds which operate in a similar manner, being dubbed a “vulture fund”, profiting from dead or dying economies. The firm itself insists it only takes action against countries that can afford to pay, but choose not to.
The decade-long fight to recover the face value of the Argentine bonds has been carried out on a number of battlefields, from the US Courts to theWorld Bank (£), but the latest turn is the most nautical of them all.
The seizure, of a 100m-long tall ship staffed by 200 sailors, appears to have been planned for some time by Elliott.
The FT reports (£):
Elliott had been waiting for the ship to stop in a port where it would have a chance to enforce legal judgments previously awarded by UK and US courts. The hedge fund declined to comment. . .
US and UK courts have awarded $1.6bn in claims in [Elliott's] favour, but Argentina has taken a tough line on lingering holdouts, saying there will be no further offers.
If a US court ruling from February 23 is upheld on appeal, Argentina must pay interest to Elliott before making any payment to holders of bonds issued in the 2005 and 2010 swaps. An appeals ruling has not yet been issued.
The Libertad, which Elliott expects to be awarded ownership of, has been estimated in value at between $10m and $15m.
The vessel, a tall ship used by the Argentine Navy to train sailors and a former holder of the world speed record for a transatlantic crossing by sail, was on a graduation tour. It is free to leave the Ghanaian port of Tema if Buenos Aires posts a bond with the court, which Elliott would then also seek to recover.
In the long-run, Elliott will still rely on winning court cases to pressure the Argentine government into paying the outstanding loan in cash, rather than boats.
International land investors and biofuel producers have taken over land around the world that could feed nearly 1 billion people.
Analysis by Oxfam of several thousand land deals completed in the last decade shows that an area eight times the size of the UK has been left idle by speculators or is being used largely to grow biofuels for US or European vehicles.
In a report, published on Thursday, Oxfam says the global land rush is out of control and urges the World Bank to freeze its investments in large-scale land acquisitions to send a strong signal to global investors to stop “land grabs”.
“More than 60% of investments in agricultural land by foreign investors between 2000 and 2010 were in developing countries with serious hunger problems. But two-thirds of those investors plan to export everything they produce on the land. Nearly 60% of the deals have been to grow crops that can be used for biofuels,” says the report.
Very few, if any, of these land investments benefit local people or help to fight hunger, says Oxfam. “Instead, the land is either being left idle, as speculators wait for its value to increase … or it is predominantly used to grow crops for export, often for use as biofuels.”
The bank has tripled its support for land projects to $6bn-$8bn (£3.7bn-£5bn) a year in the last decade, but no data is available on how much goes to acquisitions, or any links between its lending and conflict.